Modvat credit for tools with capital goods upheld, and appellate relief cannot be expanded beyond the claim.

Tools supplied with capital goods under a single invoice and necessary for the machinery's functioning were treated as eligible for Modvat credit; the wider capital goods test, rather than direct use alone, was applied, and denial of credit was not sustainable. An appellate authority could not enlarge the dispute beyond the specific relief claimed in the appeal; where the claim was confined to a limited amount, jurisdiction did not extend further. The impugned order was set aside and the appeal was allowed.

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Issues: (i) Whether Modvat credit on tools supplied with capital goods was admissible; (ii) Whether the appellate authority could travel beyond the relief claimed in the appeal.

Issue (i): Whether Modvat credit on tools supplied with capital goods was admissible.

Analysis: The tools were supplied along with the machines under a single invoice and were necessary for the working of the machinery. The reasoning accepted that the governing test was not direct use alone, and the cited precedent on wide construction of capital goods coverage applied to the facts.

Conclusion: Modvat credit on the tools was admissible and denial of credit was not sustainable.

Issue (ii): Whether the appellate authority could travel beyond the relief claimed in the appeal.

Analysis: The relief sought before the appellate authority was limited to a specified amount, and the authority was not competent to enlarge the dispute beyond that limited claim.

Conclusion: The appellate authority had no jurisdiction to go beyond the relief claimed.

Final Conclusion: The impugned order was set aside and the appeal was allowed on the basis that the credit dispute was to be confined to the limited relief claimed and the tools qualified for Modvat credit.

Ratio Decidendi: Where tools supplied with capital goods are necessary for the functioning of the machinery, Modvat credit cannot be denied, and an appellate authority cannot exceed the scope of the relief expressly claimed.

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